The Legislature hereby finds and declares that the problems relating to the critical social, economic, and environmental problems of the nation’s cities, towns, and smaller urban communities which are found and declared to exist by the Congress of the United States in the Housing and Community Development Act of 1974 as amended through the Housing and Community Development Amendments of 1981 exist within this state and that it is in the public interest for the state, cities of all classes, villages, or counties to be authorized to apply for, receive, or expend federal funds for the eligible activities under such act or to administer such programs. The Legislature hereby declares such activities to be a public purpose within this state. Money received from the federal government for such activities shall be placed in a distinct and separate fund and shall not be commingled with other money of the state, city, village, or county.